Subscribe

The millennial mind: Key considerations for smart fashion brands

Part 1: What’s important to them is important to the brand

INSIGHT ARTICLE
|
January 11, 2017

Carol Lapidus

The millennial generation has emerged as the dominant demographic in both the population and the workforce, outnumbering baby boomers as of 2014 and Gen Xers in 2015, with 92 million strong. These young adults, born between 1981 and 1997 and currently aged 19 to 35,1, 2 are described as “fickle, anti-establishment, uber-information users who are quick to share their opinions.”3 They represent the only demographic whose median incomes are expected to rise over the next five years as they age into higher income brackets.3

With an estimated $200 billion in annual buying power, millennials have become the most influential consumer group, with tech savvy and future purchasing potential making them an enticing, yet often elusive, target for fashion brands keen to reap their long-term rewards as customers. Demonstrating a characteristic imperviousness to traditional marketing and brand outreach methods, millennials are considered to be a critical, yet challenging and complex audience for many fashion brands. How does the fashion industry fully understand, effectively engage and consistently profit from this group? Knowing what’s on their minds, and why, is key in understanding their preferences and specific buying behaviors.

We explore this topic in a two-part series. Part 1 follows here.

PART 1

What’s important to millennials is important to the brand

In terms of fashion, there are a variety of needs, wishes, influences and options on the minds of millennials. The following represent some key characteristics fashion brands should consider as they reach out to this segment.

Omnichannel lifestyle: Checking their smartphones frequently throughout the day, millennials are truly omnichannel. They cycle through multiple devices a day as they interact with brands—underscoring the importance of their expectation that fashion brands and retailers present a seamless, consistent and authentically perceived presence.

Authenticity and experience: To cultivate any degree of brand affinity, most millennials will demand that apparel brands vying for their attention authentically engage them in ways that cater to their desires to experience richness and texture (this is also an increasing focus for bricks and mortar environments). Technology now enables brands to aggregate and integrate authentic customer experience elements into each step of the customer journey, whether online or in person.4 With 43 percent of millennials indicating they value authenticity over content (i.e., they must trust a source before relying on its content), they look to blogs and peer recommendations prior to purchasing, and remain far more social-network-focused than other generations.5 Yet, millennials also seem to be looking to such platforms to augment and improve in-store retail experiences rather than replace them.

Price and value: Highly adept at product comparisons and associated cost-benefit calculations, millennials indicate price is the leading—and often deciding—factor in purchasing decisions (beating out quality, brand source and availability). Google and Amazon are the first places they go on a smartphone to compare prices—95 percent of surveyed millennials indicated price sensitivity in 2016 was consistent with 2015 levels.6 Often preferring browsing to shopping online, millennials prove to be relatively frugal and intentional consumers, with more than half of surveyed millennials indicating they consider an item’s resale value prior to purchase. Such traits are often associated with the combined economic blows of the Great Recession coupled with often-substantial student loan debt, averaging about $30,000, and the fact that the average salary of a 29-year-old has not substantially increased from 2014 to 2016, according to the U.S. Bureau of Labor Statistics.7 In addition, while they are far less likely as a group than other demographics to be ideologically loyal to a brand, nearly 70 percent of millennials are members of some form of a retail loyalty program—focusing on rewards rather than loyalty.8

Data and access: With 75 percent researching products online before purchasing9 millennials have grown up with the ability to instantly answer any question with only a few taps of a smartphone. This effectively makes them voracious consumer readers of what they consider to be relevant, streamlined and customer-focused data or information on products and topics they are interested in.

Social awareness and responsibility: Millennial consumers as a whole appear to behave opportunistically in the ways they deem best for them at any given moment in time. The exception to this is where brand loyalty is linked to socially conscious causes that matter to them. About 70 percent of millennials indicate a willingness to spend more with brands that support such causes or operate using business models that align and resonate with their own values.10

With online sources shining a spotlight on injustices and waste in the apparel supply chain, some predict the defection of large swaths of millennials from low-price-point fast fashion in favor of ethical fashion. Such fashion exploits neither workers nor the environment, and often focuses on less glamorous aspects of apparel product manufacturing, such as minimizing carbon footprint, increasing standards for worker rights and protection, using sustainably grown and sourced raw materials and adhering to transparent business practices.11, 12

Social media: Ever-connected to peers and social networks via smartphones and social media, five of six millennials also connect with retail brands on social media networks, with Facebook, Twitter, Instagram and YouTube leading the pack in popularity.13 Their perceptions of fashion and apparel brands are being driven almost exclusively by online and social communities and connections rather than traditional push marketing by brands. With more than 77 percent of surveyed millennials indicating they had made purchases of items recommended by friends on social media,14 they are also 56 percent more likely to discover brand content on social networks or customized newsfeeds than via search engine queries or traditional email. Millennials are the first generation to grow up fully tied to connected technology, with 89 percent connecting daily to the internet via smartphone, which ranks far and away as the leading device used for connection. On average owning three or more mobile or smart devices, millennials are making mobile first a leading initiative for fashion brands who want to engage them. With virtually no tolerance for cumbersome and non-functional websites, apps or e-commerce tools, millennials increasingly demand a consistent, optimized online presence, which proves critical even for in-store apparel purchases, as 41 percent of millennials research a product online. 15, 16, 17, 18

While it is difficult to overstate the impact discretionary purchasing choices by millennials will have on fashion brands, some analysts have gone as far as to predict that millennial spending—in and of itself—will be the defining and deciding factor in determining whether brands win or fade into obscurity, irrelevance or bankruptcy.19 Regardless, cracking the code to connect, engage and sell to millennials is of utmost importance for fashion companies who are keenly aware that this high-value demographic is also now forming preferences and buying habits that will last a lifetime and affect behaviors of generations to come.

Worldwide Locations

Social

RSM US Client Portals

RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent audit, tax and consulting firms. The member firms of RSM International collaborate to provide services to global clients, but are separate and distinct legal entities that cannot obligate each other. Each member firm is responsible only for its own acts and omissions, and not those of any other party. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International.